Silvio Berlusconi was last night set to return to power at the head of Italy's most rightwing government since he first came to office 14 years ago.

Projections from the general election held yesterday and on Sunday gave his Freedom Folk movement a convincing victory over Walter Veltroni's centre-left Democratic Party (DP).

After Veltroni conceded defeat, an uncharacteristically subdued Berlusconi said: "I feel a great responsibility, because the months and years ahead will be difficult ones." They would, he said, be "decisive for the modernisation of the country".

Talking live to a television political chatshow, the media tycoon said he had already chosen his next cabinet, and it would include at least four women. Berlusconi said he appreciated Veltroni's good wishes, adding that his government would be open to suggestions from the opposition on "measures that affect the wellbeing of the country".

Early results indicated that he would be able to govern comfortably for the next five years with no help from the centre-left. In the senate, projections indicated that Freedom Folk and its allies would get 167 of the 315 seats - 25 more than the DP and its ally, the anti-graft Italy of Principles party. In the 630-seat chamber of deputies, Berlusconi's followers were forecast to have a majority of 63.

Italy's next government is likely to be more conservative even than the one that ruled the country for five tumultuous years to 2006. Berlusconi will no longer have to take into account the moderating influence of the centre-right Union of Christian and Centre Democrats (UDC), which broke with him shortly before the campaign and was the only other party to win a significant representation in the lower house.

But he will have to take seriously the virulently anti-immigrant Northern League, led by Umberto Bossi. It scored a resounding triumph, more or less doubling its presence in parliament.

At the other end of the political spectrum, the vote for a new Marxist-Green alliance crumbled. Projections suggested the Rainbow Left would not get a single candidate into parliament.

For the first time since the second world war, Italy will have a parliament cleanly divided between two main groups, which should bring it stability. But Berlusconi's triumph will send a shiver of apprehension through Brussels, where memories are still fresh of the way his government let Italy's public finances run out of control, threatening the stability of the euro. Romano Prodi, the former European commission president and Italy's ex-prime minister who narrowly defeated Berlusconi two years ago, reversed the trend. But to cut the budget deficit, he made the centre-left deeply unpopular by raising taxes and clamping down on evasion.

Italy's next government faces an unenviable task in trying to reinvigorate a failing economy. That was reflected in the generally cautious rhetoric of both leading candidates in the campaign. Last year, the EU announced that the Italian economy had been overtaken by Spain's.

Other symptoms of Italy's failure are legion. They include a flag carrier airline, Alitalia, which is losing €1m a day, and a refuse crisis that engulfed Naples and the surrounding region of Campania and appeared to many Italians to embody their country's plight. Projections suggested the right had triumphed by an unusually large margin in Campania.

During the campaign, Berlusconi vowed to slash taxes and boost infrastructure spending in an effort to stimulate the economy. He insisted the budget deficit could nevertheless be contained by improving efficiency in the public administration and embarking on a huge programme of public asset sales.

The election turnout, usually high in Italy, was three points lower than at the last general election in 2006 - 82%, compared with 85%, according to initial data from the interior ministry. There was speculation that the drop reflected disillusion among the young at an ageing and cronyism-prone political class.

The country looks set for five years of government headed by a 71-year-old man who has a string of trials behind him for alleged financial wrongdoing. All his convictions have been overturned on appeal and other charges against him expired under statutes of limitations.